Given its better-than-expected investment performance and stable income returns, student housing is providing to be in high demand among investors.

Specializing in the acquisition and disposition of institutional and private capital student housing assets, CBRE Student Housing Director Jaclyn Fitts spoke with Multi-Housing News about the top markets for investment last year and this year.

What were the most sought-after markets for the student housing industry in 2017?

Fitts: Markets with Tier I universities continue to attract the most investors, particularly pedestrian, new construction and pedestrian value-add properties.

Which markets are the best to invest in this year?

Fitts: The market that is best for each individual investor depends on their investment goals. For instance, Tier 1, Power 5 football universities command the lowest cap rates, while Tier 2 universities offer the highest cap rates.

What do you expect from 2018 in terms of investing?

Fitts: I believe the total investment volume will remain consistent for 2018. The cap rates for the sector should also remain consistent. We recently surveyed our clients, and they indicated increased competition for acquisitions to be their top concern over the next 12 months in the sector.

Between a single-property sale and a portfolio, which do you think is a better investment opportunity? Why?

Fitts: I do not believe one is better than the other, it just boils down to investment objectives. If an investor is looking to deploy a large amount of equity, a portfolio is more advantageous than a single-property sale. While other investors strive to only purchase single-assets because they have strict asset-specific parameters.

What financing sources will become more prevalent this year?

Fitts: The agencies, Freddie Mac and Fannie Mae, continue to be the most prevalent source for financing within the student sector. I do not anticipate that will change.